Question

Polk Incorporated issued $200,000 of 13% bonds on July 1, 2016, for $206,801.60. The bonds were dated January 1, 2016, pay interest on each June 30 and December 31, are due December 31, 2020, and were issued to yield 12%. Polk uses the effective interest method of amortization.Required:1. Prepare the journal entries to record the issue of the bonds on July 1, 2016, and the interest payments on December 31, 2016, and June 30, 2017. In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2017.

Answer 1

Answer:

Check the explanation

Explanation:

 Journal Entries  

Date               Accounts                                Debit$                  Credit$

2016    

Jul-01                    Cash                           206,801.60  

Premium on Bonds Payable                                                        6,801.60

Bonds Payable                                                                                   200,000.00

 

Dec-31  Interest Expense                             12,408.10  

Premium on Bonds Payable                    591.9  

                   Cash                                                                 13,000.00

 

2017    

Jun-30  Interest Expense                                 12,372.58  

Premium on Bonds Payable                     627.42  

                    Cash                                                                 13,000.00

1.$200,000 ´ 0.13 ´ ½ year

2.Previous book value ´ 0.12 ´ ½ year

3.$13,000 –Amount from footnote b

4.Previous book value – Amount from footnote c

Answer 2

Answer:

1.$200,000 ´ 0.13 ´ ½ year

2.Previous book value ´ 0.12 ´ ½ year

3.$13,000 –Amount from footnote b

4.Previous book value – Amount from footnote c

Explanation: